Truworths sees double-digit sales growth in UK, slump in SA

Fashion and homeware retailer Truworths expects group retail sales for the 26 weeks ending December 2023 to increase by 8.2% to R12.2 billion, thanks to a strong performance posted by its UK-based Office ‘athleisure’ retail chain.

Office London’s retail sales increased in sterling terms by 15.6% to £162 million – which translates to a 33.1% increase to R3.8 billion in rand terms – with the business benefitting from strong online sales.

“Office continues to benefit from its unique market positioning, brand partnerships and strong online presence,” Truworths told investors in a trading update on Monday.

“Online sales contributed approximately 47% of Office’s retail sales in the current period, increasing from 44% in the prior period.”

The retailer’s share price closed over 1% up on Monday, at R75.79 a share, following the release of the trading update.

SA consumer pinched

Back at home, the JSE-listed retailer – which owns the Truworths, Naartjie, Loads of Living and Office London brands – was not as fortunate as consumers continued to feel the pinch of a high interest rate and inflationary environment.

The core Truworths Africa business saw a 0.3% decline in retail sales to R8.4 billion.

The group noted that this was impacted by the high base in the previous comparable period, when sales rose by 13.4%.

“Retail sales were impacted by poor economic conditions and high interest rates, leading to reduced disposable income and declining consumer confidence,” Truworths said.

“Credit extension declined as scorecards reacted to the deteriorating credit health of the South African consumer, thereby weighing negatively on credit sales.”

Read: SA online retail could grow to 10% – Bob Shop owner

Unlike other retailers that reported a boost in retail sales during the festive shopping season, when consumers tend to be less restricted with spending, Truworths noted a 1.6% decline in retail sales during the last nine weeks between October and December.

December’s performance was also affected by ongoing congestion at the country’s ports, which the retailer says resulted in “lower than expected merchandise deliveries for the December period”.

Read: Durban container port making headway in clearing backlog of vessels

Truworths is not the first retailer to sound the alarm on the impact of port congestions on operations. Woolworths and Foschini raised similar concerns in recent updates they put out to the market.

Read: Trading outlook fragile as festive sales disappoint

Muted earnings

As a result of the decline in performance in the core business, Truworths informed investors that it expects its interim headline earnings per share for the period to increase by as much as 4% to 515 cents, up from 494.6 cents last year.

Earnings per share could strengthen by up to 5% to 535 cents, from 509 cents in the previous comparable period.

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